Because of the relationship between an asset's real rate of return and its risk, one would expect to find all of the following, except one. Which one?
A) Corporate stocks have higher rates of return than U.S. Treasury bonds.
B) Corporate stocks have higher rates of return than U.S. Treasury bills.
C) Corporate stocks have higher rates of return than corporate bonds.
D) Stocks of smaller companies have higher expected rates of return than stocks of larger companies.
E) Mutual funds including stocks of companies in politically volatile developing countries do not have as high a rate of return as mutual funds restricted to stocks of companies in developed economies.

Question

Quizplus · Accepted Answer

This statement is not necessarily true as there can be exceptions where mutual funds including stocks of companies in politically volatile developing countries may have higher rates of return compared to mutual funds restricted to stocks of companies in developed economies. It ultimately depends on the specific companies and the overall economic and political conditions in those regions.

Because of the Relationship Between an Asset's Real Rate of Return